Delivery company DoorDash has announced it will cut 1,250 jobs, as it becomes the latest major technology player to reel in spending.
DoorDash CEO Tony Xu wrote in a note to employees that the company had increased hiring during the COVID-19 pandemic in order to catch up with its growth, as the company was undersized in early 2020. But that employee growth proved to be poorly managed.
“While we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. That’s on me. As a result, operating expenses grew quickly,” Xu wrote.
The cuts, which represent around 6% of the company’s workforce, were “the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history,” according to Xu.
Xu did add the DoorDash had been more resilient than other ecommerce companies, and third party data suggests the company upped its share of the food delivery market to 56% as of September. However, like other tech companies, DoorDash remains vulnerable to external factors such as rising interest rates and a looming recession.
Employees affected by the layoffs will receive 17 weeks’ worth of compensation and healthcare through to the end of March 2023, and those on H-1B visas will have their layoff dates set to March 1 next year, giving them extra time before their visas expire.
Although the likes of Twitter, Salesforce, Facebook and others have announced layoffs, DoorDash is the first among the major food delivery companies to make cuts to staff.